In rereading the letter written by the Institute for International Finance on January 25, 2012 to the G20 Ministers and Governors there is one sentence that stood out. Emphasis is mine.
Furthermore, if the data privacy issue and inability to legally withhold ‘passthru’ payments prohibit financial institutions from entering into FATCA agreements with the IRS the objective of FATCA to combat tax evasion is not likely to be met.
If the objective is not likely to be met, then the Congress of the United States and the IRS could end up with egg all over their collective faces. Let us hope, pray and work to make sure that it is not met as much as within the power of each one of us. It is a bad law. and itr needs to be repealed. There is no better way to make it happen than for other nations so stand tall and in unison shout “No, Nein, Nyet, Não, etc.”
New book idea – “The Dummies Guide: How to Invest without FATCA and the US”
@Roger, do members of Congress and US politicians in general have a blind spot when it comes to understanding and obeying laws or do they think the laws just don’t apply to them since they can be changed whenever they feel like it?
Did it not occur to Congress the giant legal trap they were creating for any FFI that would allow itself to be coerced into signing up for FATCA?
Now I understand why there are so many lawyers in the US and why the Supreme Court is constantly having to get involved to set things straight.
My guess and its only a guess if their feet are really held to the fire they will have to use their exemptive power under the law quite liberally. I don’t think they will repeal possibly modilfy after the election if it becomes a real mess. The letter from TD Bank to the US Treasury is actually pretty good at discussing how they need to implement the regulations on the US side to not create a conflict with Canadian law. The other question is whether the real drop dead date is July 1st 2013(the date they are supposed to start identifying US Persons) or January 1st 2014(the start of witholding). If you assume there is going to be some type of intergovernmental agreement between Canada and the US it probably has to be reached before January 1 2014 not July 1 2013.
@tim, the implementation date for foreign banks has already been delayed once. It might be delayed again, do you suppose?
@Tim, do you have a link to that TD letter?
http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Tax/us_tax_7789_1_042611.pdf
The word I’ve heard is that the Treasury is trying to negotiate treaties to get around the illegality of it, and do feel pretty confident in that. In many respects, FATCA is what a lot of countries’ governments would love to do but currently can’t (FATCA almost sounds like it could have been dreamed up by the last UK Labour government – and the Tories wouldn’t resist it as it doesn’t affect their big donors necessarily, who all have their property in Belize or the Caymans.)
I suspect the British gov’t would love a tit for tat arrangement. And I suspect the Germans wouldn’t mind either, so there’s two thirds of the power in the EU potentially signed over.
I think most FFIs are going forward with FATCA programmes on the assumption that treaties will be in force by the time they need to deliver. And for big players, i.e., banks that are “too big to fail”, regulation is what keeps them alive. Regulation plays two roles for them: a barrier to entry to the market for smaller, more agile players, and elimination of competitors who may not be able to apply the compliance regimes. They love this stuff.